IMF Forecasts Gradual Slowdown In Armenia’s Economic Growth

IMF FORECASTS GRADUAL SLOWDOWN IN ARMENIA’S ECONOMIC GROWTH

ARKA
Oct 10, 2008

YEREVAN, October 10. /ARKA/. International Monetary Fund forecasts
a gradual slowdown in Armenia’s economic growth from ten percent in
2008 to eight percent in 2009 and six percent in 2013.

In its world economy review, the IMF predicts slowdown in GDP growth
from 7.25% this year to 5.75% in Commonwealth of Independent States
in 2009.

The IMF experts think that GDP growth in CIS will slow down because
of reduction in outside demand and pressure of financial markets.

The fastest economic growth is expected in Azerbaijan – 16% in 2008
and 16.4% in 2009.

Georgia’s GDP is expected to grow 3.5% in 2008 and 4% in 2009.

Kazakhstan’s GDP will grow 4.5% in 2008 and 5.3% in 2009.

GDP is predicted to grow 7.5% and 6.7% in Kyrgyzstan in these two
years, 6.5% in Moldova both in 2008 and 2009, 6% and 7% in Tajikistan,
10.8% and 10.3% in Turkmenistan.

Ukraine will face 6.4% GDP growth in 2008 and 2.5% in 2009, Uzbekistan
8% and 7.5% and Russia 7% and 5.5%.

Baltic countries will face following trends – Latvia will record 0.9%
economic decline in 2008 and 2.2% in 2009, Estonia will record 1.5%
decline in 2008 and 0.5% growth in 2009 and Lithuania 3.9% and 0.7%
growth.

The IMF says in its report that after several years of vigorous growth,
the world economic growth slowed sown precipitously (ch apters 1
and 2).

Global activity is under intense pressure of financial shock and high
prices for energy and other stock commodities.

Many countries with developed economies are close to recession or
have already plunged into recession.

Emerging economies face growth slowdown as well.

The IMF experts say that global economy faces considerable decline
amid the most dangerous financial crisis on developed financial
markets since 1930s.

They say that despite obscure situation, economic growth expectations
for 2009 reduced to 0.3% – the record low since 2002.

According to the IMF report, the United States’ economy will grow 1.6%
in 2008 and 0.1% in 2009.

Similar things are expected in Europe – 1.3% in 2008 and 0.2% in 2009.

Despite slowdown in economic growth in developing countries, it
is still expected that these countries will create some factor of
stability thanks to fast productivity growth and the strengthening
of economic policy basis.

However, the longer the crisis lasts the higher the probability of
impact on these countries is.

Developed countries should focus their macroeconomic policies on
supporting activity to help break negative feedback between conditions
in real and financial sectors. These countries should do it with
taking into consideration inflation risks.

Top-priority focuses of various emerging countries’ macroeconomic
policies differ from each other, since decision-making agencies are
trying to balance their ideas on economic growth and inflation risks.

The IMF thinks that developing countries are in more advantageous
situation, compared with past years.

However, these measures are hardly to produce effect, if sustainability
of the system is not ensured and these steps are not timely and
well-targeted.

How To Achieve A "Heated Autumn"?

HOW TO ACHIEVE A "HEATED AUTUMN"?
Kima Yeghiazaryan

Hayots Ashkhar Daily
10 Oct 2008
Armenia

As they say, the futile attempts of setting the old and new Republicans
against each other come "from the dawn of times".

When, at the successive critical stage, the media supporting the
Armenian Pan-National Movement, takes an active initiative of delving
into the activities of the Republicans and, looking through the
keyhole for several days and weeks, assures us that there is some
"growing scandal" or at least "discontent" inside party, you just
cannot help watching the amusing soap opera.

As we already mentioned, the advocates of the Armenian Pan-National
Movement have started performing this kind of strictly important task
"since time immemorial".

Following the 1998 "palace coup", they started targeting the
Republicans periodically, in an attempt to push their way through
some space "between the ring and the finger" and reveal some "sharp
controversies" that have allegedly arisen inside the party.

Hardly a month after Vazgen Sargsyan’s being elected as the Head of the
Republican Party, these people got anxious and started disseminating
statements that the new leader allegedly oppressed and ignored the
old Republicans and left them in the shadow. After Mr. Sargsyan’s
becoming a Prime Minister, they continued20the same practice, saying
that he didn’t appreciate the potential of the "old residents", and
none of the old members of the party was represented in the Government.

After the "October 27" tragedy, V. Sargsyan already became an "old"
Republican, so the activists started accusing the "new members" of not
showing any interest in the disclosure of the case. In this period,
it was particularly ridiculous to hear them announcing that the old
Republicans, together with the "Yerkrapah" members, were about to
make a joint demand for impeaching the President. And that happened
during the first year of the trial.

And the information was quite reliable since it had been "reported"
to the correspondents of the Armenian Pan-National Movement by some
of the "old" RPA members who didn’t want to disclose their names. At
the same time, they had announced that they were not going to tolerate
the existing situation inside the party and would do their utmost for
returning the RPA to its origins, since the it had deviated from the
ideas preached by Ashot Navasardyan.

Let’s note that a "new" Republican in that period was Andranik
Margaryan who, in his turn, ruthlessly ignored even the opinion of
the dissidents of the 1960’s, i.e. the former activists of the United
National Party.

And thus, the developments around20the conflict between the old and new
members continued till the moment when the "oldest members" who didn’t
want to disclose their names "stopped" making the alleged complaints to
the correspondents. And it doesn’t even make sense to say that all this
story was nothing more than the product of the fantasy of the latter.

Anyway, this fantasy was fading away for the successive time in
view of the great disappointment of those correspondents who were
eventually making sure that the prospect of splitting the Republican
Party of Armenia and exacerbating the internal political situation
in the aftermath was not realistic. Alas! The "sharp debates" they
had invented were "dying out" even in such situations when, having
thoroughly studied the pre-election list of the Republican Party of
Armenia, they announced that none of the old members was to be found
in the top ten horizons. And becoming offended, they would state that
the names of the old members had appeared on such horizons that were
unlikely to secure for them seats in the Parliament.

And finding ourselves in a state of terror, we would wait for some
fight between those who had won seats in the Parliament and those
who hadn’t, and thought we would no longer be able to prevent the
dangerous developments. Because the correspondents who had received
information from their own sources of the Republican P arty of Armenia
were persisting in their statements that the old members whose names
had appeared in the final horizons of the pre-election list had
threatened to quit the party. The extremely tense atmosphere observed
during the sessions of the RPA Council and the nervous strides in the
corridors promised a vigorous confrontation. And that, in its turn,
would automatically lead to an internal political crisis.

And we have followed quite a lot of similar virtual developments
that were assiduously invented by the selfless correspondents just
in front of our eyes.

And the recent attempt of stirring up the "ambitions" of the old
and new members and making every possible effort to split them fall
flat again.

We believe you still remember what "compassion" they displayed
for Tigran Torosyan when the latter submitted his two resignation
letters. They announced that following Tigran Torosyan’s example,
the ideological old members would very soon quit the Republican Party
and join the ex-Speaker.

And even if there is no new "splitting", the old members will go on
walking in low spirits. Besides, there are hopes that Tigran Torosyan
who displayed an unprecedentedly "bold posture" will appear in the
Northern Avenue.

However, the recent attempt of the activists appeared to be the most
"amusing". And maybe these people will not get a wink of sleep till
Octo ber 20 when the name of the new RPA leader is announced during
the NA four-day session which is going start on that day. And before
that, they still have 10 days to continue the practice of sowing
dissention between the old and new members. Circulating the names
of the two candidates, they now say that the passions inside the
Republican Party are running high since the old members are against
Edward Sharmazanov’s candidacy and the new members are against Galoust
Sahakyan’s candidacy and they "predict" terrible developments in case
of the election of the former.

And there’s no one telling them, "You know that’s none of your
business. Does it matter to you who will become the leader of the RPA
faction, the largest political group in the parliament?" It isn’t
as though the LTP and the activists of his new movement demanded
extraordinary parliamentary elections.

There’s no one saying, "If your demand still remains in force, why
are you making such a fuss and suffering so much if the new leaders,
no matter who he is, will not manage to enjoy his new status as the
revolutionaries are going to hold their exclusive rally on October 17,
till the start of the NA four-day session?" And then, God knows what
will happen.

So, do away with your sufferings. You will still have a lot of
occasions for inciting new clashes between the old and20new Republicans
after the extraordinary session.

So, this is a subject of "endless discussions" that cannot be exhausted
in any way.

IMF Mission Announced Concluding Statement About Armenia

IMF MISSION ANNOUNCED CONCLUDING STATEMENT ABOUT ARMENIA

RIA Oreanda
Economic News
September 23, 2008 Tuesday
Russia

Yerevan. OREANDA-NEWS On 23 September was announced, that an IMF
staff team, led by Ms. Marta Castello-Branco, IMF Mission Chief for
Armenia, visited Yerevan during September 3-16, 2008 to meet with
representatives of the government, the Central Bank of Armenia (CBA),
the international donor community, and the private sector. Mr. Lorenzo
Prez, Deputy Director of the IMF, also participated in the concluding
policy discussions. The goal of the mission was to review recent
economic developments, reach agreement on the 2009 budget, and conduct
negotiations on a new IMF-supported program for Armenia.

Macroeconomic Performance and Outlook

GDP growth continues to be strong, but inflationary pressures are
still high. Thus far, the conflict between Georgia and Russia does
not seem to have significantly affected the growth outlook and, unless
tensions persist, a 10 percent real growth rate is within reach this
year. Annual inflation surged to 11.5 percent in August, mostly
due to external shocks, but also as a result of higher domestic
demand-driven by rising incomes, rapid credit growth, and large
foreign exchange inflows.

Tightened monetary and fiscal policies and the recent fall in
international food and fuel prices are expected to bring inflation
back to around 7.5 percent by the end of this year. In the next few
years, growth should remain robust, and inflation should stabilize
around the central bank’s target rate of 4 percent.

Under the current macroeconomic conditions, fiscal policy could
play a more active stabilization role, notably with a tighter fiscal
stance this year. Budget execution in 2008 has been prudent thus far,
due to strong revenue performance and under-execution of expenditure,
despite the increase in average pensions by 60 percent. On this basis,
we expect the 2008 fiscal deficit to be significantly lower than
budgeted. Fiscal policy will need to remain tight in 2009 in order
to help keep inflation low.

To limit the effect of higher food and energy prices on other
price increases, the CBA has raised its policy interest rate
gradually from 4.5 percent in June 2007 to 7.75 percent in September
2008. Nevertheless, private sector credit and monetary aggregates
continue to grow at a rapid pace, reflecting strong domestic demand
and the still limited impact of monetary policy on bank lending rates.

The widening current account deficit is a growing concern. Although
private transfers have remained strong, the current account has
continued to deteriorate. Imports have surged on the back of high
international food and energy prices and strong import demand, while
exports have been sluggish. With appreciation pressures diminished
by rising import demand, the dram/dollar exchange rate has remained
broadly stable thus far in 2008.

Structural Reforms

The new government has given clear priority to tax and customs
reform. It approved a comprehensive and ambitious plan to make
the tax administration more efficient, and create more equal
conditions for businesses. To make tax compliance simpler for small
businesses, a VAT threshold of AMD 58.3 million will be introduced
in January 2009. Starting in 2010, trade fairs will be moved from
the presumptive to the general VAT and income tax regime. However,
there are still delays in processing VAT refunds, which negatively
affect exporters. The authorities are planning to reform the VAT
refund process following best international practices, clear the
stock of late VAT refund claims, and process all VAT refund claims
within the legal time limit. In the financial sector, the authorities
have introduced legislation to improve consumer protection, market
transparency, and financial intermediation. Finally, preparations
for the introduction of a funded pension pillar are underway.

New IMF Program

Under the previous three-year IMF program, which ended in May 2008,
Armenia achieved double digit growth, single digit inflation, and a
significant reduction in poverty. Nevertheless, more progress needs to
be made with structural reforms in several areas, particularly in tax
policy and tax and customs administration. The government has requested
a new IMF program to support this unfinished reform agenda. Given the
progress made so far, this new IMF program would provide less financing
than its predecessors. Its main purpose is to signal the IMF’s support
for Armenia’s macroeconomic policies and structural reform agenda in
the country’s transition from low-income to emerging market economy
status, thus facilitating Armenia’s integration into the world economy.

Structural conditionality under the new program will focus mainly on
tax administration and tax policy reforms, given their positive impact
on the business environment, financial intermediation, economic growth,
and poverty reduction. In addition, the program aims at making fiscal
policy a more effective demand management tool, improving the fiscal
framework, and strenghtening coordination between the monetary and
fiscal authorities.

Nalbandian Attended CIS Foreign Ministers Summit In Bishkek

NALBANDIAN ATTENDED CIS FOREIGN MINISTERS SUMMIT IN BISHKEK

PanARMENIAN.Net
10.10.2008 13:17 GMT+04:00

/PanARMENIAN.Net/ Armenian Foreign Minister Edward Nalbandian attended
a meeting of Foreign Ministers of CIS member states in Bishkek,
the RA MFA press office told PanARMENIAN.Net.

The agenda included security, economic and humanitarian issues.

The Ministers also considered structure reforms, CIS activities
and cooperation.

Speaker Of Armenian Parliament H. Abrahamian Receives S. Kapinos

SPEAKER OF ARMENIAN PARLIAMENT H. ABRAHAMIAN RECEIVES S. KAPINOS

ARMENPRESS
Oct 8, 2008

YEREVAN, OCTOBER 8, ARMENPRESS: Speaker of Armenian parliament Hovik
Abrahamian received today the head of the OSCE Yerevan office Sergey
Kapinos.

The public relations department of Armenian parliament told Armenpress
that Hovik Abrahamian greeted the guest and noted that he is aware
of the discussions and the process of agreements between the office
and the Armenian parliament and noted that he is ready to support
the implementation of these agreements.

Head of the OSCE Yerevan office Sergey Kapinos referred to the
cooperation and noted that their organization is ready to continue
in 2009 the training classes of parliament’s staff which were held
until 2006.

He also informed the speaker of the parliament about the memorandum
which will be signed in the nearest future with the head of the
parliamentary defense, national security and home affairs permanent
commission on conducting seminars on the issues of the parliamentary
oversight over the force institutions which is an adopted process in
the OSCE member countries.

Mr. Kapinos said that OSCE authorities are pleased with the creation
of a parliamentary ad hoc commission dealing with inquiry into March
1-2 events and formation of a fact finding mission.

At the end of the meeting an agreement was reached on signing a
memorandum of cooperation with Armenian parliament in the nearest
future.

Deputy Foreign Minister Receives Czech Delegation

DEPUTY FOREIGN MINISTER RECEIVES CZECH DELEGATION

AZG Armenian Daily
09/10/2008

Armenia-Czechia

The press center of the Foreign Ministry of the Republic of Armenia
informs that Deputy Minister Gegham Garibjanian today received the
parliamentary delegation from the Czech Republic, headed by Jan Casal.

The Armenian and Czech sides expressed hope that the upcoming
chairmanship of the Czech Republic in the EU shall benefit the
relationships between our countries. Mr. Daribjanian added that
cooperation with the EU is one opf the priorities of Armenia’s
foreign policy.

Negroponte Says U.S., Iraq Nearing Security Agreement

NEGROPONTE SAYS U.S., IRAQ NEARING SECURITY AGREEMENT
By Erica Goode, The New York Times

Pittsburgh Post Gazette
Wednesday, October 08, 2008
PA

BAGHDAD — Winding up a visit to Iraq that has taken him to six
provinces, Deputy Secretary of State John D. Negroponte yesterday
said U.S. and Iraqi negotiators were close to resolving issues that
have stood in the way of a security agreement governing the continued
presence of U.S. troops in the country.

Mr. Negroponte said his trip included "fruitful discussions" on a
variety of political and economic issues, including the security
agreement. But he declined to discuss what sticking points remained
in negotiating the accord.

He was joined by Iraqi Foreign Minister Hoshyar Zebari at a news
conference in the fortified Green Zone.

Mr. Zebari said "new formulations and new language" had allowed
progress on the legal status of U.S. troops in Iraq. The question of
whether, and under what conditions, American soldiers and military
contractors who are accused of crimes should be subject to Iraqi laws,
or given immunity from them, has been a central obstacle throughout
the talks.

"I think we are very close," Mr. Zebari said, but he added that
"no final decision has been made."

Mr. Zebari, who noted that Mr. Negroponte had been helpful in moving
the talks forward, said further progress would call for "bold political
decisions."

In September, Iraqi and U.S. officials said the legal immunity issue
was threatening to derail the negotiations. The United States has
argued for the same legal protections that apply in other countries
where U.S. troops are based. The Iraqi government has been adamant
that any crime committed outside of a military operation should be
subject to prosecution in Iraqi courts.

In negotiating the agreement, the United States has agreed to withdraw
combat troops from Iraqi cities by June 2009, and from the rest of
Iraq by the end of 2011 — assuming that conditions in the country
remain stable.

Iran, meanwhile, stepped up pressure against the proposed agreement,
with President Mahmoud Ahmadinejad telling a visiting Iraqi official
yesterday that Iraq had "a duty" to resist the Americans, The
Associated Press reported.

Also yesterday, an Iraqi panel led by President Jalal Talabani approved
the provincial elections law passed by parliament late last month. The
panel’s action clears the way for elections to occur by Jan. 31. The
elections are seen by many U.S. and Iraqi officials as critical to
achieving reconciliation among Iraq’s political and religious factions.

Although the presidential panel approved the election law, it also
recommended that parliament vote separately on an article of the
bill dealing with political representation for Christians and other
minorities. The article, which set aside 15 provincial council seats
across Iraq for minorities, was written into an earlier version of
the law but dropped before the legislation was passed by parliament.

Eman al-Assadi, a member of parliament’s legal committee, said the
question of minority representation would be taken up by lawmakers
today. The members, she said, would consider several possible
solutions, including voting separately on the article and forming a
committee to draft a new law addressing the issue. The removal of the
article from the law stirred protests by Christians and other groups.

Mr. Negroponte, who during his stay in Iraq visited Kirkuk —
the oil-rich northern city at the center of a dispute among Arabs,
Kurds, Turkmens, Christians and other groups — called passage of the
provincial elections law "noteworthy," but also mentioned the issue
of minorities. "I heard often while traveling, and in my meetings with
the government of Iraq, that it was of paramount importance to resolve
the call for minority representation during the electoral process,"
he said.

He added that Iraq had made many gains, and was "slowly but surely
strengthening its democracy."

In Mosul yesterday, a U.S. soldier died of wounds sustained in
a firefight at a home where a suspected insurgent had been believed
to be hiding, the U.S. military said. When gunfire erupted from the
house, an airstrike was conducted, the military said, adding that an
Iraqi police officer and a member of the insurgency were also killed.

The U.S. military also said yesterday that 46 Armenian troops were
returning home. The Armenians served under a Polish brigade that
earlier this month ended its mission in Iraq. Troops from Italy,
Spain, Japan and other countries have also departed.

In a statement, the military said 380 Armenian troops had served in
Iraq since 2005, providing support in transportation, engineering
and medicine.

The Great Game in the Caucasus: Bad Moves by Uncle Sam

Oct ober 7, 2008
The Great Game in the Caucasus:
Bad Moves by Uncle Sam

By CONN HALLINAN

The tale of what the Bush Administration is up to in the Caucasus is
slowly filtering out, although the U.S. press has largely deep-sixed
the story. The recent Georgia-Russia war was just one move in a chess
game aimed at cornering the energy reserves of Central Asia, extending
the North Atlantic Treaty Organization (NATO) to Moscow’s vulnerable
southern border, and ending Russia’s control of the Black Sea. Georgia
was just a pawn – an expendable one at that – in a high stakes game.

While the White House and some in the European Union (EU) represent
the recent war as one between an increasingly powerful Russia
reasserting itself in its former empire versus a small, democratic
nation trying to recover two of its former provinces, that story is
fraying a bit. Georgian President Mikheil Saakashvili was recently
condemned by the EU’s Office for Democratic Institutions and Human
Rights for undemocratic practices, and a recent NATO analysis of the
war supports the Russian charge that Tbilisi started the whole affair.
The maneuvers that led to the war, however, have gone largely
unreported.

Shortly after the collapse of the Soviet Union in 1991, the U.S. moved
into Kazakhstan, Central Asia’s richest energy producer. U.S. oil
companies, including Chevron, showed up in an effort to pry Kazakhstan
away from its leading partners, China and Russia. Kazakh President
Nurusultan Nazabayev was wined and dined, campaigning to get his
country to send its oil through the trans-Caucasus Baku-Tbilisi-Ceyhan
(BTC) pipeline, thus bypassing Russia and putting China’s energy
jugular in Western hands.

The U.S. put a full-court press on oil-rich Azerbaijan as well.

Georgia was on the chess board because the BTC runs thorough that
country’s south. The U.S. cemented control over the pipeline by
helping to sponsor the "Rose Revolution" that brought Saakashvili to
power in 2003.

But there was more than oil at stake in all this.

Starting almost a decade ago, the U.S. began pressuring fellow NATO
member Turkey to modify or abrogate a rather obscure treaty called the
Montreux Convention, a 1936 agreement that gives Turkey the right to
restrict the passage of warships through the Bosporus Straits and the
Dardanelles. The Convention has allowed Turkey and Russia to control
the Black Sea and to prevent any foreign power from establishing a
major presence there.

The U.S., which was not a party to the original treaty, has pressed
Turkey to let it turn the Black Sea into a NATO lake. Turkey is a NATO
member, as are Bulgaria and Rumania. The U.S. already has military
bases in Romania. If the Bush Administration had succeeded in bringing
the Ukraine and Georgia into the Alliance, NATO would have checkmated
the Russian fleet at Sevastopol, restricting its access to the
Mediterranean and isolating it from the Middle East.

However, the Americans play a lousy game of chess, particularly if
some of the pieces on its side of the board have different agendas.

Take Turkey, for instance.

Ankara has not only shown no inclination to dump the Montreux
Convention, it has proposed a "Caucasus Stability and Cooperation
Pact" that would sideline NATO in favor of a settlement by regional
powers. Turkish Prime Minister Recep Tayyip Erdogan presented the
proposal to Moscow shortly after the war.

"The chief value in the Turkish initiative," said Russian Foreign
Minster Sergei Lavrov, is that it is "common sense" and assumes that
"countries belonging to the region themselves should decide how to
conduct affairs there."

Lavrov went on to add two other "regional" issues that could be dealt
with using a similar framework: Iraq and Iran.

That the Turkish proposal caught the Americans by surprise is an
indication of how the U.S. failed to understand how complex the game
of chess is in that region of the world. Turkey is indeed a member of
NATO, but it also has its own national interests to consider.

While Turkish trade with Georgia is $1 billion a year, it’s almost $40
billion with Russia. Turkey also gets 70 per cent of its natural gas
from Russia. Turkey and Russia have long dominated the Black Sea, and
both see it as central to their economic and security interests. If
the U.S. moves large numbers of warships into the area, it won’t just
be the Russians who lose control of that body of water.

Neither are the Turks eager to modify international treaties like the
Montreux Convention. Doing so, writes M.K. Bhadrakumar, a career
diplomat in the Indian Foreign Service and a former ambassador in the
region, "would open a Pandora’s Box. It might well turn out to be a
step towards reopening the Lausanne Treaty of 1923, the cornerstone
which erected the modern Turkish state out of the debris of the
Ottoman Empire."

According to Bhadrakumar, the U.S. plan was to bring Kazakhstan into
NATO as well. The Kazakh-Russian border is the longest land border
shared by any two nations in the world. "It would be a nightmare for
Russian security if NATO were to gain a foothold in Kazakhstan," he
says.

In short, what the U.S. is up to is the 21st century’s version of the
"Great Game," the competition that pitted 19th century imperial powers
against one another in a bid to control Central Asia and the Middle
East.

The move to surround Russia and hinder China’s access to energy is
part of the Bush Administration’s 2002 "West Point Doctrine," a
strategic posture aimed at preventing the rise of any economic or
military competitors.

When U.S. Secretary of State Condoleezza Rice recently said that
Russia was facing international isolation over the Georgia war, she
was whistling past the graveyard. Rather than being isolated, the
Russians have been lining up allies among the very states the U.S. had
hoped would join it in ringing the Russians with newly recruited NATO
allies.

During the recent meeting of the Shanghai Cooperation Organization
(SCO) in the Tajikistan capital of Dushanbe, Kazakh President
Nurusultan Nazarbayev assured the Russians they could rely on
Kazakhstan for support. "I am amazed that the West simply ignored the
fact that Georgian armed forces attacked the peaceful city of
Tskhinvali," said Nazarbayev, "Kazakhstan understands all the measures
that have been taken [by Russia] and supports them."

The SCO is made up of Russia, China, Kazakhstan, Kyrgyzstan,
Tajikistan, and Uzbekistan.

Azerbaijan, another major target for the U.S., has kept quiet on the
Georgian War, but announced that it was reducing the amount of oil and
gas it was shipping through the BTC pipelines and increasing its
shipments through Russia and Iran. "We knew there was a risk of
political turmoil in Georgia, but we did not expect war," Elhar
Nasirov, vice-president of Azerbaijan’s state oil company, Socar, told
the Financial Times. "It’s not a good idea to have all your eggs in
one basket, especially when that basket is so fragile."

If both Kazakhstan and Azerbaijan balk at using the BTC, it could not
only derail U.S. strategy in the region, but the pipeline itself.

While NATO has tried to put up a united front on Georgia, the Alliance
is deeply split between the U.S., Britain, Poland and the Baltic
States on one side, and France, Germany, Italy, and Spain on the
other. In part, the reluctance of the latter group to join
Washington’s crusade against Moscow is based on self-interest. Russia
is an important trading partner and provides Europe with much of its
energy.

But a number of European countries are also having serious doubts
about Georgia’s leader. According to Der Spiegel, NATO intelligence
sources back the Russian account of the war, not Georgia’s. "Five
weeks after the war in the Caucasus the mood is shifting against
Georgian President Saakashvilli," the newspaper wrote on Sept. 15.

This shift in sentiment has even been voiced in the U.S. Congress,
although it has yet to be reported in any major U.S. media. Addressing
the Senate Armed Services Committee Sept. 9, Senator Hillary Clinton
said it was not "smart" to isolate Russia over the war and pointedly
asked, "Did we embolden the Georgians in any way?" Clinton called for
a commission to look into the origins of the war, echoing a similar
call by Europe’s foreign ministers meeting in the French city of
Avignon.

At a meeting of the EU’s inter-governmental commission in the Black
Sea resort of Sochi, French Prime Minister Francois Fillon said it was
important to "strengthen the partnership between the European Union
and Russia, and France and Russia."

While a Harris Poll shows that some Europeans are now "more concerned"
with Russia than they were before the war, the same poll shows the
U.S. is still considered a far more serious "threat to global
stability." The poll also indicates overwhelming opposition in
Germany, France, Italy, Spain and Britain to increasing military
spending in the aftermath of the Georgian war. Indeed, any government
that presses for a more aggressive posture toward Russia, or knuckes
under to Washington’s pressure to increase military spending, is
likely to find itself out of power.

The Georgian war, like the Iraq war, were disasters brought on by a
combination of imperial arrogance and fundamental cluelessness. The
U.S. now finds itself locked into a military stalemate in Iraq and
Afghanistan, increasingly isolated in the Middle East and Central
Asia, and enmeshed in one of the greatest financial meltdowns in its
history.

Check.

This is how empires end.

Hallinan can be reached at [email protected]

http://counterpunch.com/hallinan10072008.html

Baku – Peter Semneby: "We Have Understood The Importance Of Turkey’s

PETER SEMNEBY: "WE HAVE UNDERSTOOD THE IMPORTANCE OF TURKEY’S ROLE IN THE REGION RECENTLY"

Azeri Press Agency
06 Oct 2008 19:06
Azerbaijan

Baku. Victoria Dementyeva-APA. "The elections are important steps
for consolidation of the country towards democracy", EU Special
Representative for the South Caucasus Peter Semneby told journalists,
APA reports.

He stated that pre-election situation in Azerbaijan was very
calm. Semneby touched upon the situation in Georgia and noted that
it influenced on Nagorno Karabakh conflict.

"Such situation has potential danger inside it," he said.

To him, Turkey can participate in the solution to conflicts in South
Caucasus.

"We do not understand the importance of Turkey’s role. We have
understood it recently", he said.

United States – Ready To Support Armenia

UNITED STATES – READY TO SUPPORT ARMENIA
Lilit Poghosyan

Hayots Ashkhar Daily
03 Oct 2008
Armenia

Mary Jovanovich, US Ambassador Extraordinary and Plenipotentiary in
Armenia, yesterday convened her first press-conference to introduce
her country’s viewpoints on the developments in and around Armenia.

The newly appointed Ambassador arrived in Armenia about a fortnight
ago, and is impressed by the "unprecedentedly favorable attitude"
towards her. "I have been in diplomatic service for 22 years now,
and this is the first country that gives me such a good reception,"
Ms. Jovanovich said, expressing satisfaction that she had had the
opportunity to participate in the events devoted to the independence
of Armenia and the ceremony of consecrating the chrism.

The new Ambassador was also pleased to announce that her tenure begins
in a historically important period when the ice in the Armenian-Turkish
relations is beginning to melt, and the Karabakh settlement issue is
returning to its normal course after the temporary rollback.

The United States highly appreciates "President Sargsyan’s bold
initiative of inviting the Turkish President to Armenia and Abdullah
Gul’s willingness of accepting the invitation and arriving in Armenia.

This also creates opportunities for the opening of the border, the
formation of diplomatic ties and the normalization of the relations.

We also ha ve certain hopes related to the settlement of the
Karabakh issue. These initiatives create opportunities for making
transformations in the region in terms of security and welfare. They
may be useful especially to the people of Armenia, from the point
of view of the opening of the borders, trade relations and economic
development, and may essentially impact on the population’s welfare."

The Ambassador assured the participants that the United States will
continue to assist in these developments to the best of its efforts
and promised "to do everything possible" on her part.

"The Armenian-American relations began 90 years ago when President
Wilson received the credentials of the first Ambassador to
Armenia. Those relations are based on such factors as the presence
of a great number of Armenians in the United States and the existence
of common values and interests. The United States is hereafter ready
to assist the Armenian people and the Armenian government in making
progress in the spheres of economy and democratic development.

The economic and democratic reforms, the formation of rule of law, the
implementation of all these principles by everybody and for everybody
are issues that require time. The people and the government of the
United States will support Armenia while passing through that path."

The first question addressed to the speaker concerned the
post-electoral developments, more specific ally – the issue whether the
"numerous pro-opposition figures" arrested after the mass disorders
of March 1 are political prisoners or criminal offenders.

"Every time there are people who are deprived of freedom on
account of their political views or political activities (such as
participating in rallies), there are always grounds for concerns. We
have expressed those concerns to the government and introduced our
considerations. But it is also necessary to make a distinction as to
whether the conversation is about the political freedoms, e.g. the
freedom of speech and the freedom of holding rallies, or whether those
people were involved in illegal activities. It is required for any
government to be able to make this distinction," the Ambassador finds.

In connection with Turkey’s initiative of establishing a Caucasian
platform, Ms. Jovanovich noted that the project is at the stage of
elaboration, and it is still early to make any comments in this
regard unless the details are clarified. "In general, the United
States welcomes all the initiatives aimed at achieving regional
security, stability and integration." According to some sources,
the initiative of the recent Armenian-Turkish contact and the agenda
of the "football diplomacy" were prepared in the United States. Can
the diplomat refute or confirm that information?

"I believe this initiative was proposed by Presidents Sargsy an and
Gul, as well as their advisors. Inviting the Turkish President was a
very bold step by President Sargsyan. And President Gul’s accepting the
invitation can also be estimated as a very bold and brave step. These
were steps towards the development of the relations between the two
countries, and the United States expresses its satisfaction that such
development is possible," the speaker answered.

With regard Turkey’s pretensions to being involved in the Karabakh
settlement process, the Ambassador said that "Turkey is already
involved in the Minsk Group process, like all the other member states
of the group apart from the Co-Chairs. The Turkish President proposed
a trilateral meeting on the level of the Foreign Ministers. Armenia,
Turkey and Azerbaijan are neighboring countries, and the trilateral
meeting of the Foreign Ministers is a positive phenomenon. And we will
naturally welcome such developments. Besides, a meeting was held in
New York within the frameworks of the Minsk Group, and the Co-Chairs
met with President Sargsyan and the two Foreign Ministers. This is
also a positive phenomenon."

The fact that the Sargsyan-Aliev meeting in St. Petersburg was held
in a constructive atmosphere, and the negotiation process continues
"in the same spirit" inspires the Ambassador with optimism that "it
is really possible to anticipate a certain progress with regard to
this impor tant issue."

The United States periodically makes statements that it protects the
territorial integrity of Azerbaijan. Is there any sense in continuing
the talks if it is already "predetermined" that the problem should be
solved based on the principle of territorial integrity? Why wasn’t
the clause on the "immunity of borders" considered prevalent for
the Soviet Union, Yugoslavia and Serbia but it is being considered
prevalent for Azerbaijan.

In response to this question of "Hayots Ashkharh", M. Jovanovich
said, "Any conflict has its specific features, and it is necessary
to find a specific kind of solution for each conflict. Yes, there
is the principle of territorial integrity, but there are also other
principles; for example, the principle of not using force or the
principle of self-determination. And it is necessary to view each
conflict as a separate case. As far as this particular case is
concerned, there is a progress in the conflict settlement process,
and it is possible to record a positive development."